PRINCIPLES AND PRACTICES OF MANAGEMENT

Module I:

- Concept of Management: Functions and responsibilities of managers, Fayol’s

principles of management, management thought - the classical school, the
human relations school, system theory, contingency management.
- Planning: The nature and purpose of planning, types of planning, advantages
and limitations of planning, Concept and nature of objectives, Types of
objectives, importance of objectives, management by objectives (MBO).

Module II:

- Strategies and Policies: Concept of corporate strategy, formulation of

strategy, types of strategies, types of policies, principles of formulation of
policies, decision making, decision-making process.

Module III:

- Organizing: Nature and purpose of organizing, basis of departmentation, span

of management, determinants of span of management, line and staff
relationship, line and staff conflicts, bases of delegation, delegation and
decentralization, methods of decentralization, leadership-types.

Module IV:

- Directing: Directing and problems in human relationships, motivation,

communication and leadership, coordinating.
- Controlling: Concept and process of control, control of overall performance,
human aspect of control.

Module V:

- Staffing process: HRM and Personnel Management, meaning and definition,

objectives, HR planning process, recruitment, selection, training, placement,
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sources of recruitment, methods of recruitment, performance appraisal, meaning
and concept, career planning, promotion and transfer, compensation
management, concept and objectives, wage and salary, grievance redressal
mechanism.

Module 1:

MEANING AND DEFINITION OF MANAGEMENT

In general usage, the word "management" identifies the group of people whose
job is directed towards the efforts and activities of other people towards common
objectives. In simple terms, management is a process of getting results with a
group of people. Different authors have defined management in different ways.
A few of the definitions are given below. According to Henry Fayol, to manage
is to forecast and to plan, organize, command, coordinate, and control.

FEATURES OF MANAGEMENT

- It is a process: Management is a process of planning, organizing the efforts of

people.
- It is a social process: Management is getting things through the efforts of
people.
- Decision-making: Management process involves the decision-making of
various departments.
- It has universal application.
- It is required at all levels.

FUNCTIONS OF A MANAGER / FUNCTIONS OF MANAGEMENT

1. Planning:

Planning is the process of making decisions about the future. It is the process of
determining enterprise objectives and selecting future courses of actions
necessary for their accomplishment. Planning can also be referred to as the
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process of deciding in advance what is to be done, when and where it is to be
done, how it is to be done, and by whom it is to be done.

2. Organizing:

Organizing is concerned with the arrangement of an organization’s resources, i.e.,

people, materials, technology, and finance, to achieve enterprise objectives. It
involves decisions about the division of work, allocation of authority and
responsibility, and the coordination of tasks.

3. Staffing:

A manager’s greatest responsibility is to select, direct, develop, and evaluate the

people of the organization. Staffing is the function of employing suitable persons
for the enterprise. It may be defined as an activity where people are recruited,
selected, trained, developed, motivated, and compensated for manning the
various positions.

4. Directing:

The function of guiding and supervising the activities of subordinates is known

as directing. To get things done, a manager should get along with people. He
should motivate them to give their best. He should also communicate
organizational policies and strategies effectively and get them implemented.

5. Controlling:

In controlling, performances are observed, measured, and compared with what

had been planned. If the measured performance is found wanting, the manager
must find the reasons for the same and take corrective actions.

RESPONSIBILITIES OF A MANAGER:

- Accomplishes department objectives by managing staff; planning and

evaluating department activities.
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- Maintains staff by recruiting, selecting, orienting, and training employees.
- Ensures a safe, secure, and legal work environment.
- Develops personal growth opportunities.
- Accomplishes staff results by communicating job expectations; planning,
monitoring, and appraising job results.
- Coaches, counsels, and disciplines employees.
- Develops, coordinates, and enforces systems, policies, procedures, and
productivity standards.
- Establishes strategic goals by gathering pertinent business, financial, service,
and operations information.
- Defines objectives, identifies and evaluates trends and options, chooses a
course of action, and evaluates outcomes.

SCHOOLS OF MANAGEMENT THOUGHT

The schools of management thought are frameworks for understanding how to

manage organizations. They are based on different ideas about people and how
organizations work.

1. CLASSICAL SCHOOL OF MANAGEMENT THOUGHT

The classical management theory believes that workers have basic physical and
economic needs. It focuses on efficiency, specialization, centralized decision-
making, and profit maximization, ignoring social needs or job satisfaction.

In simpler terms, it's like looking at workers as cogs in a machine, mainly

concerned with getting the most work out of them. Social needs or happiness at
work are not considered important.

The Classical Theory of Management includes:

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- Administrative Management: This focuses on managing organizations as a
whole. Henry Fayol, a key figure, categorized all business activities into six
groups.
- Scientific Management: Emphasizes optimizing productivity through
scientific methods and minimizing waste.
- Bureaucratic Management: Focuses on hierarchy and rules to achieve
efficiency.

FAYOL'S PRINCIPLES OF MANAGEMENT

1. Division of Work: Specialize tasks to increase efficiency.

2. Authority and Responsibility: Managers must have the authority to give
orders and the responsibility to ensure they're carried out.
3. Discipline: Employees must follow rules.
4. Unity of Command: Each employee should receive orders from only one
supervisor.
5. Unity of Direction: The organization should have a single, unified objective.
6. Subordination of Individual Interest: Individual interests should not override
organizational goals.
7. Remuneration: Fair compensation for work.
8. Order: Things and people should be in the right place at the right time.
9. Centralization: Degree of decision-making authority centralized at the top.
10.Scalar Chain: Chain of authority from top to bottom.
11.Equity: Fairness in dealings with employees.
12.Stability of Tenure: Management should provide systematic human resource
planning and ensure that replacements are available to fill vacancies.
13.Initiative: Management should encourage employees to be innovative and
generate ideas.
14.Esprit de Corps: Promote team spirit and harmony among employees.

SCIENTIFIC MANAGEMENT

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Scientific management is a method of directing human efforts using scientific
principles and specialized management techniques.

Key Principles:

1. Science, not rule of thumb: Replace old methods with scientifically

developed ones.
2. Harmony, not discord: Select and train workers carefully to match job
requirements.
3. Cooperation, not individualism: Emphasize cooperation between workers and
management for efficiency.
4. Maximum output, not restricted output: Aim to maximize productivity.
5. Development of each man to his greatest efficiency and prosperity: Strive for
prosperity for both employers and employees through cooperation.

BUREAUCRATIC MANAGEMENT

Bureaucratic management, introduced by Max Weber, emphasizes rules,

procedures, and hierarchy within organizations.

Key Features:

1. Division of Labour: Specialization for efficient utilization of expertise.

2. Hierarchy of Authority: Clear lines of authority from top to bottom.
3. Procedures: Established methods for handling work situations.
4. Rules: Defined duties and rights of employment.
5. Impersonal Relations: Emphasis on professional conduct.
6. Selection and Promotion Based on Technical Competence: Advancement
based on skills and performance.

Advantages:

- Consistent employee behavior

- Clear job duties
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 - Efficient use of human resources
- Specialized workers
- Continuity of the organization

Disadvantages:

- Excessive paperwork
- Lack of employee devotion
- Limited initiative and growth
- Resistance to change

NEOCLASSICAL APPROACH: HUMAN RELATIONS SCHOOL

The human relations theory, founded by Elton Mayo, focuses on worker

satisfaction and informal workplace dynamics to improve productivity.

Key Features:

- Understanding human behavior in work groups

- Emphasis on interpersonal relations
- Larger production through good human relations
- Integration of psychology and sociology in management studies

Main Experiments:

- Illumination experiment
- Relay assembly test room
- Bank wiring observation room experiment
- Mass interview technique

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MODERN APPROACH TO MANAGEMENT

SYSTEM THEORY OF MANAGEMENT

The system theory of management sees organizations as interconnected systems,

like a human body with various parts working together. Key features include:

1. Sub-Systems: Organizations are made up of smaller systems that work

together.
2. Holism: All parts of the organization work together as one system, affecting
each other's decisions.
3. Synergy: The combined output of all parts of the system is greater than their
individual outputs.
4. Closed and Open Systems: Organizations interact with their external
environment, but also have internal systems.
5. System Boundary: Organizations are distinct entities separate from their
external environment.

CONTINGENCY THEORY OF MANAGEMENT

Contingency theory focuses on adapting management techniques to fit specific

situations. Key features are:

1. Situational Management: Management techniques depend on the complexity

of the situation.
2. If-Then Approach: Management decisions depend on specific conditions. For
example, if workers have certain needs, then specific motivators should be
used.
3. No Universal Principles: There's no one-size-fits-all management style; it
depends on the circumstances.
4. Adaptability: Organizations must adjust to both internal and external
environments.

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PLANNING

Planning is a vital management function involving:

1. Objective-based: Plans are developed to achieve organizational objectives.

2. Pervasive: All management levels engage in planning.
3. Participative: Planning involves input from multiple individuals.
4. Flexible: Plans should be adaptable to changing circumstances.
5. Primary Function: Planning is fundamental for organizational success.
6. Futuristic: It involves deciding future actions based on forecasts.
7. Continuous Process: Planning is ongoing and constantly evolving.
8. Mental Activity: It requires thinking and decision-making.
9. Forward-looking: Planning anticipates future needs.
10.Best Selection: It involves choosing the most effective actions for the future.

TYPES OF PLANNING

Planning can be categorized into three types based on different criteria:

Nature of Planning:

a. Formal Planning: Officially documented plans outlining objectives and

actions to be taken.
b. Informal Planning: Plans conceived mentally without formal documentation,
suitable for short-term and simple tasks.

Duration of Planning:

a. Short-term Planning: Covers less than two years, focusing on immediate

actions and easily adaptable.
b. Long-term Planning: Spans over five to fifteen years, dealing with broader
aspects and requiring gradual adjustments.

Levels of Management:

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a. Strategic Planning: Long-term planning conducted by top management,
setting overall organizational objectives and strategies.
b. Intermediate Planning (Tactical Planning): Medium-term planning handled
by middle management, refining strategic plans and implementing them.
c. Operational Planning: Short-term planning for current activities, managed by
lower-level supervisors to keep daily operations running smoothly.

IMPORTANCE OF PLANNING

Planning is crucial for organizational success due to several reasons:

1. Uncertainty Mitigation: Helps anticipate and prepare for changes and

uncertainties.
2. Goal Focus: Aligns activities with organizational objectives for clarity
and direction.
3. Coordination: Unifies departmental goals and promotes harmony in
operations.
4. Control: Sets standards for performance evaluation and facilitates
corrective actions.
5. Efficiency Enhancement: Optimizes resource allocation and
streamlines activities.
6. Economical Operations: Anticipates resource needs, leading to cost-
effective operations.
7. Motivation: Sets targets and encourages employees to achieve them,
fostering motivation.

LIMITATIONS OF PLANNING

Despite its importance, planning has limitations:

1. Costly and Time-consuming: Requires significant time, effort, and

resources, making it challenging for small enterprises.

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 2. Data Reliability: Depends on accurate data, which may not always be
readily available.
3. Time Intensive: Involves defining objectives, collecting, and analyzing
data, which can be time-consuming.
4. Restricts Initiative: Limits employee initiative as everyone is expected
to follow the plan rigidly.
5. Vulnerable to Technological Changes: Rapid technological
advancements may render plans outdated.
6. External Factors: Plans are based on assumptions, which may be
disrupted by external changes.
7. Forecasting Limitations: Future uncertainties make forecasting
unreliable, impacting planning effectiveness.

BUSINESS OBJECTIVES

Business objectives are the predetermined goals that guide organizational

efforts:

1. Multiple in Nature: Organizations set various objectives to achieve overall

goals.
2. Hierarchical: Objectives are set at different levels of management,
maintaining a hierarchy.
3. Networked: Objectives are interconnected and should support each other.
4. Prioritized: Certain objectives are more critical than others at any given time.
5. Verifiable: Expressed in measurable terms for assessment and verification.
6. Long-term or Short-term: Objectives can be classified based on time horizon,
with survival being a long-term objective and market standing as a short-term
one.

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IMPORTANCE OF BUSINESS OBJECTIVES

A clear definition of objectives encourages unified planning, as departmental

objectives align with the overall goals of the organization, promoting cohesion.

Objectives facilitate the coordination of workers' efforts and the efficient

utilization of organizational resources.

They serve as motivation for individuals within the organization, providing a

sense of purpose and direction.

Objectives are essential for decentralizing authority across different levels of

management, ensuring effective decision-making and accountability.

TYPES OF BUSINESS OBJECTIVES

Economic Objectives:

1. Profit Earning: Generating profits is vital for business survival and growth in
a competitive market.
2. Creation of Customers: Attracting and retaining customers is crucial for
sustaining business operations.
3. Regular Innovations: Continuous improvements and innovations in products,
processes, and distribution methods enhance competitiveness.
4. Best Possible Use of Resources: Efficient utilization of resources, including
labor and materials, maximizes productivity and minimizes waste.

Social Objectives:

1. Production and Supply of Quality Goods and Services: Providing high-

quality products and services to meet societal needs and expectations.
2. Adoption of Fair Trade Practices: Conducting business ethically and
transparently, avoiding unfair practices.

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3. Contribution to General Welfare: Supporting community development and
societal well-being through corporate social responsibility initiatives.

Human Objectives:

1. Economic Well-being of Employees: Ensuring fair compensation and

benefits for employees to enhance job satisfaction and productivity.
2. Social and Psychological Satisfaction of Employees: Creating a positive work
environment with opportunities for growth and recognition.
3. Development of Human Resources: Investing in training and development
programs to enhance employee skills and competencies.
4. Well-being of Socially and Economically Backward People: Supporting
marginalized communities and promoting diversity and inclusion.

National Objectives:

1. Creation of Employment: Contributing to national employment by providing

job opportunities.
2. Promotion of Social Justice: Addressing inequalities and promoting fairness
and inclusivity in business practices.
3. Production According to National Priority: Aligning production with national
goals and priorities set by the government.
4. Contribution to the Revenue of the Country: Fulfilling tax obligations and
contributing to national revenue.
5. Self-sufficiency and Export Promotion: Supporting national self-reliance and
promoting exports to boost the economy.

Global Objectives:

1. Raise General Standard of Living: Improving living standards globally by

providing access to quality goods and services.
2. Reduce Disparities among Nations: Contributing to global economic
development and reducing inequalities between nations.

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3. Make Available Globally Competitive Goods and Services: Producing goods
and services that meet global standards and demands, enhancing the country's
reputation and earning foreign exchange.

MANAGEMENT BY OBJECTIVES

Management by Objectives (MBO) was developed by Peter F. Drucker. It

emphasizes aligning individual job performance with overall business objectives.

Definition: MBO is a managerial system that systematically integrates activities

toward organizational goals, improving both individual and enterprise
performance.

Features of MBO:

1. Focuses on goal achievement.

2. Includes both short-term and long-term objectives.
3. Aims to redefine the relationship between superiors and subordinates.
4. Requires active participation and involvement from all members.
5. Emphasizes periodic performance reviews.

Steps in MBO:

1. Setting objectives: Establishing organizational goals as guidelines.

2. Developing action plans: Translating objectives into actionable plans.
3. Conducting periodic reviews: Evaluating performance based on planned goals.
4. Performance appraisal: Assessing performance and implementing corrective
measures if needed.

Benefits of MBO:

- Encourages subordinate participation in goal setting.

- Enables employees to control their own performance.
- Provides clear performance standards.

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 - Motivates employees.
- Reduces ambiguity through clear objectives.
- Integrates various levels of objectives with overall goals.

Limitations of MBO:

- Setting objectives can be challenging.

- Subordinate participation may not be feasible in all organizations.
- Focuses mainly on short-term goals, neglecting long-term objectives.
- Relies on verifiable and measurable objectives.
- Implementation can be costly.
- Requires qualified staff, which may not be affordable for small
organizations.

MEANING OF STRATEGY

Strategy is the action managers take to achieve organizational goals, setting a

general direction for the company and its components to reach desired future
states.

MEANING OF POLICY

Policy is a general statement formulated by an organization to guide its personnel.

It serves as a mode of thought and principles underlying organizational activities.
Policies provide a framework for decision-making, guiding managers within
certain boundaries. They do not necessarily require action but aim to guide
decision commitments.

TYPES OF STRATEGY

1. Stability Strategy:
- Used when an organization is content with its current position and does
not seek significant changes.

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 - Maintains the status quo to sustain the current level of operations.
2. Growth Strategy:
- Involves expanding and diversifying business operations.
- Implemented through market development, product expansion,
mergers, or diversification.
3. Retrenchment Strategy:
- Adopted to improve the organization's position or survive during
challenging times like recessions or increased competition.
- May involve cutting back on expenses, reducing workforce, or
restructuring operations.
4. Combined Strategy:
- Utilized by large organizations operating in multiple industries.
- Incorporates a mix of the strategies mentioned above to meet diverse
business needs.

FORMULATION OF STRATEGY

1. Establishing Organizational Objectives:

- Setting long-term goals to guide strategic decisions.
2. Analyzing Organizational Environment:
- Conducting SWOT analysis to identify strengths, weaknesses,
opportunities, and threats.
3. Setting Quantitative Goals:
- Defining specific targets to achieve short-term and long-term
objectives.
4. Aligning Objectives with Divisional Plans:
- Ensuring departmental goals are coherent with overall organizational
objectives.
5. Performance Analysis:
- Evaluating actual performance against set standards.
7. Selecting Strategy:
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 - Choosing the most suitable strategy after evaluating alternatives.

TYPES OF POLICIES

- Organizational Policies: Determine overall goals and activities of the

organization.
- Functional Policies: Guide specific functions like production,
marketing, or finance.
- Originated Policies: Initiated by managers to provide guidelines for
subordinates.
- Appealed Policies: Formulated based on requests from subordinates to
address specific situations.
- General Policies: Reflect the management's philosophy and aim to
motivate employees.
- Specific Policies: Address particular issues such as transfer or
compensation.
- Written Policies: Formulated and communicated in written form,
leaving no room for deviation.
- Implied Policies: Inferred from the behavior of superiors, offering
more flexibility.
- Supportive Policies: Designed to support major policies, aiding in their
implementation.
- Minor Policies: Address routine matters of lesser importance.
- Composite Policies: Combination of policies to achieve overarching
objectives.

PRINCIPLES OF POLICY FORMULATION

- Specificity, clarity, and simplicity.

- Flexibility with stability.
- Consideration of internal factors.

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 - Reflecting company objectives.
- Establishing lines of communication.
- Periodic evaluation.
- Coordination and consistency.
- Complementarity and justifiability.

DECISION MAKING

- Decision making is the process of making choices by identifying a

decision, gathering information, and assessing alternative resolutions.
- It involves establishing objectives, classifying and prioritizing
objectives, developing selection criteria, identifying alternatives,
evaluating alternatives against criteria, choosing the best alternative,
and implementing the decision.

ORGANIZING AND ITS MEANING

- Organizing is the process of arranging activities to achieve goals,

assigning tasks to departments, and delegating authority.
- It involves defining, grouping, and structuring activities and
establishing authority relationships.
- Organizing helps attain objectives, assigns tasks to managers, and
fosters coordination within the enterprise structure.

DEPARTMENTATION

- Departmentation involves grouping tasks into departments and

subdepartments for efficiency and coordination.
- Basis includes departmentation by function, product, location,
customer, or process, depending on organizational needs.

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Merits of Departmentation by Function:

1. Suitable for small enterprises as it helps create major departments.

2. Promotes specialization among employees.
3. Economizes operations and creates a logical structure.
4. Facilitates coordination between departments.

Demerits of Departmentation by Function:

1. May result in excessive centralization of decision-making.

2. Slows down the decision-making process.

Departmentation by Product:

In organizations with multiple products, departmentation by product is most

suitable. Activities are grouped based on the products or product lines.

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Merits of Departmentation by Product:

1. Each product division can be managed as a separate profit

center, enhancing accountability.
2. Top management can focus on centralized activities like
finance and research, as operational tasks are delegated.
3. Facilitates decentralization of decision-making.

Demerits of Departmentation by Product:

1. Increases management costs.

2. Coordination issues may arise at the top level.

Departmentation by Territory:

This method is suitable for organizations with broad

geographical markets, like pharmaceuticals, banking, and
consumer goods. Territories, such as districts or regions, are
defined for operational purposes.

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Merits of Departmentation by Territory:

1. Facilitates local operations like sourcing materials and labor, and tapping into
local markets.
2. Enables focused attention on local customer groups.

Demerits of Departmentation by Territory:

1. Communication and coordination challenges may arise between different

regional offices.

Departmentation by Customers:

This approach is used by businesses providing specialized services. It involves

dividing marketing activities to cater to diverse groups of buyers in the market.

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Merits of Departmentation by Customers:

1. Solves specific needs of different customer segments effectively.

Demerits of Departmentation by Customers:

1. Risk of duplicating resources and facilities, leading to

underutilization.
2. Challenges in coordinating between different customer
departments.

Departmentation by Process:

It involves classifying activities based on the processes involved.

Merits of Departmentation by Process:

1. Saves costs through streamlined operations.

2. Allows for specialized expertise.
3. Enables efficient equipment maintenance.

Demerits of Departmentation by Process:

1. Coordination challenges between departments.

Departmentation - Combined Base:

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At times, multiple departmentation methods are used together.

Line and Staff Relationship:

Line and staff relationships refer to a setup where staff specialists advise line
managers on their duties. Staff managers assist line managers by providing
specific administrative services and guidance.

Benefits of Line and Staff Relationship:

1. Handling complex managerial functions: Qualified staff specialists help

manage complex organizational operations efficiently.
2. Assisting in decision-making: Expert knowledge aids managers in making
informed decisions on various organizational matters.
3. Relieving an over-burdened top executive: Staff specialists support busy top-
level executives by conducting research, analyzing data, and providing
valuable insights.

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Line and Staff Conflict:

Staff-line conflict arises from disagreements and jealousy between operating

managers/units and staff/support managers/units, posing challenges to
organizational harmony and effectiveness.

Solution to Line and Staff Conflict:

To foster harmony between line and staff personnel, organizations should:

1. Clearly define the limits of line and staff authority.

2. Encourage serious consideration of staff advice by line managers.
3. Ensure staff managers operate within company policies and objectives.
4. Recognize and address implementation difficulties.
5. Foster mutual understanding and cooperation between line and staff
personnel.

Span of Management:

Span of management, also known as span of supervision or control, refers to the

number of subordinates effectively managed by a superior. The determinants of
span of management include the capacity of the superior and subordinates,
supervision from others, nature of work, availability of staff assistance, and
communication techniques.

Delegation of Authority:

Delegation of authority involves sharing duties from top-level management to

subordinate managers, granting them the necessary authority and responsibility
to perform tasks efficiently.

Decentralization:
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Decentralization is the systematic delegation of authority throughout the
organization. It empowers lower levels of management with decision-making
authority, except for tasks that require central oversight.

Methods of Decentralization:

1. Horizontal decentralization: Authority is decentralized within the same level

of management, mainly for similar nature of work.
2. Vertical decentralization: Authority is delegated from top to bottom levels of
management.
3. Selective decentralization: Authority is decentralized to different sections of
the organization based on specific needs.
4. Pure decentralization: Authority is fully decentralized throughout the
organization.

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